Lack of will stalls Gatt negotiations

WATCHERS of the Uruguay round of international trade talks expressed little surprise last night at the apparent end to attempts by the United States and the European Community to resolve the differences that had brought six years of negotiations to a halt.

Last night's failed meeting was the latest of many. The sense of urgency created by warnings that if no deal is struck now, it will be impossible to strike another for many months to come had been created by similar warnings many times before. The weary truth is that although economists believe both the EC and the US would benefit from lowering trade barriers and subsidies unilaterally, whether the other did so or not, governments are always under political pressure from interest groups not to liberalise trade unless others do also.

But hopes had risen that the combination of recession in the world economy, a US presidential election and the political uncertainty in Europe had given both sides ample incentive to come to an agreement. Political weakness can work both ways, however. The French government, tottering from the narrowness of the 'yes' margin in last month's Maastricht referendum, appears to have been held to ransom by its angry farmers.

As the most highly subsidised farmers in Europe, and also as the continent's biggest agricultural exporters, they stand to lose the most from any concessions that the EC might make in an attempt to strike a wider deal with the United States. Government ministers in France are therefore unwilling to see the protection they negotiated for the French agricultural sector over long hours of talks on the Common Agricultural Policy swept away in an evening meeting between a European commissioner and the United States trade representative.

But economists point out the irony that France is not just the world's second biggest exporter of farm products. It is also, after the US, the world's second biggest exporter of services. And a successful conclusion to the trade round would help France export more services by bringing them for the first time under the jurisdiction of the General Agreement on Tariffs and Trade.

In France, the breakdown of the Gatt talks will probably be secretly welcomed since it gives the government breathing space during the months of autumn which has become the season of strikes and peasants' protests.

In a statement before the failure of the talks yesterday, Daniel Bernard, the French Foreign Ministry spokesman, said there was 'no link, apart from a coincidence in timing between the Birmingham European Council, the Gatt negotiations and the American elections'. His statement was revealing since it underscored a desire not to have too many troubles in this week of all weeks.

A senior French official said that France hoped that the rest of Europe would demonstrate solidarity to preserve France's 'vital interests' in the Gatt talks: 'There would be a crisis in the community if our partners did not understand the French position.'

After Jean-Pierre Soisson, the Agriculture Minister, said at the weekend that it was not his role to help George Bush's re-election, it became plain that France was shaping up for an old-style row with the United States. Either it is seeking some climbdown by Washington or it has decided that Mr Bush is likely to be defeated in the presidential election next month and that a new administration might be more amenable.

Yesterday's setback in Brussels is unlikely to dampen the Bush administration's near desperate desire to secure an understanding on at least the farm subsidies component of a new Uruguay Round before the presidential election on 3 November.

'Bush is setting huge store on this, it's almost his last chance to bring off a big success before the vote in his chosen field of foreign policy,' a senior economist said last night.

After last night's talks, there seemed little hope of a resolution to the row. But even the planned weekend meeting in Toronto between the two sides is a straw worth clutching at. The talks have demonstrated that there is certainly a way for the EC and the US to compromise on trade. What has yet to be found is the political will.